We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The Q1 earnings season of 2025 is crucial, thanks to the tariff-laden scenario. Investors will focus less on actual first-quarter results and more on assessing how emerging tariffs and the broader macroeconomic environment are affecting earnings.
Early reports and guidance updates from initial filers indicate that many companies may have to lower or withdraw their previous forecasts due to the uncertainty created by the new tariffs. Basically, companies are on the verge of shifting business policies. Tariffs will decide how they operate in the future.
Still, investors must be interested to know how earnings and revenues have shaped up in Q1. Investors should note that while earnings normally draw maximum attention, we would like to emphasize that sales are equally important.
This is because sales are harder to adjust in an income statement than earnings. A company can land up on decent earnings numbers by adopting cost-cutting or some other measures that do not speak for its core strength. But it is harder for a company to mold its revenue figure.
Both factors make it necessary to look at sectors that are expected to exhibit strong revenue growth this reporting cycle, no matters what their earnings growth picture look likes.
Expected Revenue Growth for Q1
Per the Earnings Trends report issued on April 16, 2025, earnings for the S&P 500 are expected to be up 6.8% in Q1 while revenues are likely to rise 3.9%. Note that eight out of 16 sectors are expected to register revenue growth in the ongoing reporting season, with expected growth rate ranging from 0.9% to 10.1%.
Below we highlight three sectors that are likely to record strong revenue growth in Q1.
The technology sector is projected to register the highest revenue growth of 10.1% in Q1 of 2025. The AI euphoria is known to all, which makes the sector a major beneficiary. Who can ignore the ongoing AI boom?
The rise of China’s lower-cost AI may have hindered the winning momentum of U.S.-based tech companies (which have been investing billions in AI innovations). Still, the overall AI euphoria is here to stay.
Medical – SPDR S&P Health Care Services ETF (XHS - Free Report)
The medical or healthcare sector appears well-positioned with a 7.5% revenue growth estimate, the second best in the universe of 16 S&P sectors categorized by Zacks. Investors can take a look at the XHS ETF.
The retail sector is expected to record 4% revenue growth. U.S. retail sales increased 1.4% sequentially in March, greater than the expectation of 1.3% and following a 0.2% gain in February.
Sales marked the largest monthly gain since January 2023. This surge was largely attributed to a 5.3% increase in motor vehicle and parts sales, potentially driven by consumers anticipating auto tariffs. Retail sales excluding autos also rose 0.5% month over month. However, the front-loaded sales pattern may weigh on retail sales in Q2.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
3 Sector ETFs With Revenue Growth Potential
The Q1 earnings season of 2025 is crucial, thanks to the tariff-laden scenario. Investors will focus less on actual first-quarter results and more on assessing how emerging tariffs and the broader macroeconomic environment are affecting earnings.
Early reports and guidance updates from initial filers indicate that many companies may have to lower or withdraw their previous forecasts due to the uncertainty created by the new tariffs. Basically, companies are on the verge of shifting business policies. Tariffs will decide how they operate in the future.
Still, investors must be interested to know how earnings and revenues have shaped up in Q1. Investors should note that while earnings normally draw maximum attention, we would like to emphasize that sales are equally important.
This is because sales are harder to adjust in an income statement than earnings. A company can land up on decent earnings numbers by adopting cost-cutting or some other measures that do not speak for its core strength. But it is harder for a company to mold its revenue figure.
Both factors make it necessary to look at sectors that are expected to exhibit strong revenue growth this reporting cycle, no matters what their earnings growth picture look likes.
Expected Revenue Growth for Q1
Per the Earnings Trends report issued on April 16, 2025, earnings for the S&P 500 are expected to be up 6.8% in Q1 while revenues are likely to rise 3.9%. Note that eight out of 16 sectors are expected to register revenue growth in the ongoing reporting season, with expected growth rate ranging from 0.9% to 10.1%.
Below we highlight three sectors that are likely to record strong revenue growth in Q1.
Technology – Technology Select Sector SPDR Fund (XLK - Free Report)
The technology sector is projected to register the highest revenue growth of 10.1% in Q1 of 2025. The AI euphoria is known to all, which makes the sector a major beneficiary. Who can ignore the ongoing AI boom?
The rise of China’s lower-cost AI may have hindered the winning momentum of U.S.-based tech companies (which have been investing billions in AI innovations). Still, the overall AI euphoria is here to stay.
Medical – SPDR S&P Health Care Services ETF (XHS - Free Report)
The medical or healthcare sector appears well-positioned with a 7.5% revenue growth estimate, the second best in the universe of 16 S&P sectors categorized by Zacks. Investors can take a look at the XHS ETF.
The sector is non-cyclical in nature and has been witnessing consistent job growth in recent times (read: 3 Sector ETFs & Stocks to Gain Amid Upbeat March Jobs Data).
Retail – SPDR S&P Retail ETF (XRT - Free Report)
The retail sector is expected to record 4% revenue growth. U.S. retail sales increased 1.4% sequentially in March, greater than the expectation of 1.3% and following a 0.2% gain in February.
Sales marked the largest monthly gain since January 2023. This surge was largely attributed to a 5.3% increase in motor vehicle and parts sales, potentially driven by consumers anticipating auto tariffs. Retail sales excluding autos also rose 0.5% month over month. However, the front-loaded sales pattern may weigh on retail sales in Q2.